A bank is a financial establishment that invests money deposited by customers, pays it out when required, makes loans at interest, and exchanges currency. According to Abbreviationfinder, HSBC stands for Hong Kong and Shanghai Bank Corporation.
View by State
In a commercial sense, a bank is a credit institution that offers paid services for the movement of capital. As an entrepreneur, you are probably asking yourself the question: Do I have to open a business account with my bank? Here we explain to you whether you really need a business account. As a credit institution, a bank offers services for payment transactions, credit transactions and capital transactions. In Germany, a credit institution is a commercial company that does banking.
View by Country
The bank and its general functions
Banks generally perform six main functions. These main functions include:
- Services such as cash transactions
- Granting loans
- Monetary function (total payments)
- (Monetary policy incentives interest rates increase or interest rate or lower)
- Investment function (securities trading)
- Economic function
The classic business basis of banks is in particular the management of savings deposits and lending.
Economic functions of a bank
At the economic level, banks have three main functions:
Deadline transformation – 1st function of a bank
Investors and borrowers often think in different time periods. While investors tend to want to get their money very short-term, borrowers often want long-term loans. Banks offer their customers very flexible investment conditions, for example with checking accounts or overnight money accounts, which can be emptied completely from one day to the next. On the other hand, they lend money for longer periods, often over several years. Deadline transformation poses a risk if banks suddenly lose their customers’ trust. In this case, there can be a “bank run” in which all investors want to have their money paid out at once. Of course, this poses problems for the bank because it lent the money to its customers over the long term.
View by Continent
Risk transformation – 2nd function of a bank
While savers definitely want to get back the money that they invest in banks, there is a risk that the individual debtor will not be able to meet his obligations with every loan granted. Since the bank grants a large number of loans and is relatively well informed about the probability of default on its borrowers, the overall risk from the loans granted is not very great. For their part, investors can therefore assume that they will almost certainly get their savings back.
Batch size transformation – 3rd function of a bank
Investors are often private individuals who have very small savings. In contrast, companies require loans of considerable value. Banks can solve this problem by taking the money of many investors and lending it to a smaller number of borrowers.
The bank and its customer groups
Bank customer groups include private customers, corporate customers, states and other banks. The individual customer groups are described in more detail below.
Private customers
A private customer is a single person – in contrast to corporate customers or institutions. A bank’s retail banking business is again divided into
- Standard customer: focus on mass business (payment transactions, loans, credit cards)
- Wealthy client: focus on investment advice
Corporate banking
Corporate customers are business customers – i.e. companies and institutions. They usually do their business through a company account. The focus here is on lending to companies.
States
States also belong to a bank’s customer group. The range of offers here includes the granting of government bonds.
Banks
In addition to private customers, corporate customers and states, banks also have other banks as customers. This trade between banks among themselves is also called interbank trade.
Latest articles
- Schurz, Nevada (3/18/2023) - According to top-medical-schools, Schurz, Nevada is located in Mineral County, about 35 miles south of Hawthorne. The city covers an area of 0.7 square miles and has a population of about 600 people. The climate in Schurz is generally dry… …
- Tubac, Arizona (3/17/2023) - According to top-medical-schools, Tubac, Arizona is a small city located in Santa Cruz County, about an hour south of Tucson. It has a population of about 1,000 people and is situated in the heart of the Sonoran Desert. The geography… …
- Tonto Basin, Arizona (3/16/2023) - According to top-mba-universities, Tonto Basin, Arizona is located in the Tonto National Forest and is situated between Phoenix and Flagstaff. This small town of about 5,000 people offers a unique combination of desert landscape and lush pine forests. The climate… …
- Cal Nev Ari, Nevada (3/15/2023) - According to top-mba-universities, Cal Nev Ari is located in the heart of Nevada, just 40 miles south of Las Vegas. It is situated in a valley surrounded by rolling hills and mountains. The climate in Cal Nev Ari is generally… …
- Cape Verde Mountains, Rivers and Lakes (3/14/2023) - According to baglib.com, Cape Verde is an archipelago of ten islands situated in the central Atlantic Ocean, approximately 570 kilometers off the coast of Western Africa. The islands are divided into two groups, the Barlavento Islands and the Sotavento Islands.… …
- Clearfield, Utah (3/13/2023) - Clearfield, Utah is a city in Davis County with a population of about 30,000 people. The city is located in the northern part of the Wasatch Front region and is situated at the base of the Wasatch Mountain Range. It… …
- Croatia Government and Political Parties (3/13/2023) - According to politicsezine, Croatia is bordered by six countries: Slovenia, Hungary, Serbia, Montenegro, Bosnia and Herzegovina, and Albania. Slovenia is located to the north of Croatia and is known for its picturesque mountains and lakes. It is home to the… …
- Winchester, New Hampshire (3/12/2023) - Winchester, New Hampshire is a small town located in Cheshire County with a population of approximately 1,726 people. The town was first settled in 1733 and incorporated in 1753. Winchester is surrounded by beautiful rolling hills, lush forests, and winding… …
- Wilton, Alabama (3/12/2023) - Wilton, Alabama is a small town with a population of around 1,500 people. It is situated in the southeastern corner of the state, close to the border with Florida and Georgia. The climate in Wilton is typically mild, with average… …
- Monterey, Indiana (3/11/2023) - Monterey, Indiana is a small town located in Monterey Township in Pulaski County. It has a population of just over 1,000 people and covers an area of approximately 0.5 square miles. The town is located on the banks of the… …